An Irritable Mental Gesture of Liberalism Visualized:Only Resembling The Idea of Showing Respect

"In the United States at this time Liberalism is not only the dominant but even the sole intellectual tradition. For it is the plain fact that nowadays there are no conservative or reactionary ideas in general circulation. This does not mean, of course, that there is no impulse to conservatism or to reaction. Such impulses are certainly very strong, perhaps even stronger than most of us know. But the conservative impulse and the reactionary impulse do not, with some isolated and some ecclesiastical exceptions, express themselves in ideas but only in action or in irritable mental gestures which seek to resemble ideas." -- Lionel Trilling, 1950

Where The Money Is: America's Asset Allocation as of 12/31/10

Cash: $8.8 trillion (14.4 percent).

Stocks: $17.1 trillion (27.9 percent).

Bonds: $35.3 trillion (57.7 percent).

Tax Reform Should Come Off The Table: Spending Cuts Only Are Acceptable

To Sen. Reid and Pres. Obama, tax reform means tax increases.

So fuhgeddabowdit. 

Automatic cuts to defense and social spending it should be.

Ohio Repudiates ObamaCare Nov. 8th, Nov. 15th Obama Punishes Ohio by Stopping Gas Leases

'change we much'

As pointed out by an astute caller to Larry Kudlow's radio program today on WABC.

The Nov. 15 announcement by the USDA here means tens of thousands of jobs lost to Ohio and the loss of cheap natural gas for the country, according to this analysis by The Heritage Foundation.

On Nov. 8 Ohioans resoundingly rejected ObamaCare's mandate that Americans buy health insurance by a 2 to 1 margin, stating “In Ohio, no law or rule shall compel, directly or indirectly, any person, employer, or health care provider to participate in a health care system.”

'The Means of Government Oppression'

From Lawrence Hunter, here:

standing armies in peacetime;

the regulatory instruments of torture [politicians, bureaucrats and judges] use to command and control individuals’ behavior;

access to individuals’ pocketbooks and bank accounts by . . . the power of direct taxation.

Total Cash in Circulation at the End of 2010 was North of $0.935 Trillion

Per the Fed, here.

$1 billion

$1 trillion

h/t pagetutor

Talk About a Banking Farce: The US Federal Reserve System Itself is Currently Leveraged 53:1

As in $2.782 trillion in liabilities divided by $.052 trillion in capital: 

Have a nice weekend!

(source)

The Farce of Letting Banks Simply Refigure Themselves to be Far Less Risky

From Jeffrey Snider's latest in a series of penetrating meditations on contemporary banking:

Basel II gives banks latitude in "modeling" the potential riskiness of each specific asset since banks long ago successfully argued that it was inappropriate to assign broad weightings and definitions to idiosyncratic assets.

So instead of selling stock into a bad market or engaging in asset fire-sales (concrete expressions of a "bad" bank), banks will simply refigure themselves to be far less risky, thereby increasing their capital ratios, "fixing" the problem without much fuss. Reality no longer has a seat at the banking table since it is a demonstrable fact that banks are holding far riskier assets than they estimated only a few months ago (just ask MF Global), especially since default risk is not the only concern.

To what purpose do capital ratios serve if they are to be so easily discarded by the farce of one-way "risk-weighted asset optimization"?

Internal Migration Hits Record Low, Down Over 75 Percent From 1985 Peak

Why don't you stretch out on the sofa so you can rest your government handicaps on a pillow?

CNBC.com's Diana Olick has the story here:

Just over 11 million Americans moved between March of 2010 and March of 2011, according to a new report from the U.S. Census. ...

The housing crash has left Americans stagnant, but even worse, it has left homeowners trapped. The decline in the mobility rate of those who already own homes was even more dramatic. Just 4.7 percent of homeowners moved in the past year, down from 5.2 percent the previous year, according to the Census. That translates into 9.7 million homeowners, again a record low.

The immobility of current homeowners is a huge drag on the economy.

It's not just malaise. It's sclerosis. 

The Big Fat Idiot Establishment Republicans Like Rush Limbaugh Won't Replace Your Tax Deductions

When deductibility of interest expenses in a wide variety of vehicles was eliminated for income tax purposes in the tax reform act of 1986 under Ronald Reagan, those deductions ended up being replaced by deductibility of interest if incurred through HELOCs (home equity lines of credit) shortly thereafter.

Deductibility of interest expense on consumer loans, car loans and credit cards went the way of the dodo, only to be shifted to HELOCs. It was a fateful decision which made overleveraging of housing as routine as taking out the trash. But that's an entirely different kettle of fish.

In 1987 Congress quickly acted to expand deductibility of HELOC interest expense because the 1986 act cut people off at the knees and they didn't like it one bit. It was a consumer society accustomed to deducting credit card interest, and it didn't like the new rules at all. The 1986 act quickly proved to be a futile attempt to curb consumer spending and encourage savings. The political fallout was so great that the interest expense from HELOC borrowing was dramatically expanded to fill the gap the next year.

I quote from The New York Times, here, February 2, 1988:

BORROWINGS AGAINST EQUITY: In addition, homeowners will be allowed to claim mortgage deductions for up to $100,000 in borrowings against the equity in their house - no matter what the loan is used for. 

A veritable chorus of voices today on the right and left, including Rush Limbaugh who is simply phoning it in these days, is appealing to this period to urge the country to get behind a Republican Super Committee plan to raise revenues by closing loopholes like the mortgage interest deduction for wealthier taxpayers, "just like we did in 1986."

Oh yeah? What's in it for us?

Once the camel gets its nose under this tent in the name of making the rich pay more, you can bet the precedent will be used down the road to deprive the middle class also of the deductibility of interest on a home mortgage.

And you'll get nothing to replace it except an empty promise to lower your overall tax rate, which the next Congress will rescind in a heartbeat. Few of you remember that the top tax bracket from 1988 to 1992 was 28 percent. Bill Clinton and the Democrats made short work of that.

Real conservatism is about using federal tax policy to promote property ownership, ordered existence and family formation. The current crop of establishment Republicans, including Rush Limbaugh, is a bunch of phonies. Rush can't even remember 1986:

The Republicans are offering a plan which would take away itemized deductions for anybody making over $174,400 a year. In exchange for that they would lower the top tax rate from the current 35 down to 28%. We've done this before. We did this in 1986. This was part of Reagan tax reform except the top marginal rate then was 50. Wait a minute. No. All itemized deductions for people who make the... Stick with me on this. All itemized deductions for everybody who makes $174,000 or more -- home mortgage interest, charities, all of that, gone in exchange for a lowered rate from 38, 28%. Now, we've done this before.  Back in 1986, top rate was 50, took it down to 28, there was a bubble of 31 percent for few people, and we got rid of some deductions.

There will be no future America without the traditional family.

Too bad Rush Limbaugh has never had one.

Iowa Republicans Fall Big Time For Fake Conservative Newt Gingrich

In a new Rasmussen poll, here.

They don't call them hayseeds for nothing.

Good Lord Jeeves. Surely not Newt!?

I'm afraid so, sir.

ObamaCare's Truly Amazing and Perverse War on Traditional Families

ObamaCare will require employees to accept single affordable coverage when offered, making their dependents ineligible for federally subsidized coverage;

that in turn will encourage divorce or shacking up so that dependents are, voila!, no longer dependents and thus qualify for federally subsidized coverage;

it will create a perverse incentive for such employees to seek employment in smaller companies with fewer than 50 employees which are not required to provide health coverage in order to qualify for federally subsidized coverage;

that will perversely affect employment growth because some businesses will want to stay lean and mean to avoid coming under ObamaCare's umbrella;

it will create a perverse incentive for employer coverage to be unaffordable in order to qualify employees for federally subsidized coverage;

and that in turn will make pay-cuts acceptable to employees whose employers must pay a fine for offering unaffordable coverage.

Read all about it from Diana Furchtgott-Roth, here.

Doh! Central Banks Are Supposed to Lend to Solvent Banks, not Sovereigns, Dummy!

"It is very clear from its origin that lender of last resort by a central bank is intended to be lending to individual banking institutions and to institutions that are clearly regarded as solvent. And it is done against good collateral, and at a penalty rate. That's what lender of last resort means.

"That is a million miles away from the ECB buying sovereign debt of national countries, which is used and seen as a mechanism for financing the current-account deficit of those countries . . .."

-- Mervyn King, Bank of England, quoted here

Even Ron Paul Does The Mussolini

What Fun! Bailouts Crash! Treas. Dept. Says Autos Cost Taxpayers $80 Billion, TARP $57 Billion

So The Detroit News here:

The Treasury Department dramatically boosted its estimate of losses from its $85 billion auto industry bailout by more than $9 billion . . ..

In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion, up from its previous estimate of $14.33 billion.

The Treasury now pegs the cost of the bailout of GM, Chrysler Group LLC and the auto finance companies at $79.6 billion. ...

[For TARP t]he government now expects to lose $57.33 billion, including the full cost of the housing program, up from $36.7 billion. The new estimate means the government doesn't believe it will make an overall profit on its bailouts.

In other words, the bailouts were a failure, and the taxpayers got stuck with the bill. But you already knew that.

With ObamaCare About to Pass, Elena Kagan Wrote to Harvard Plagiarist Laurence Tribe to Exult !!

She should recuse herself from hearing any case involving ObamaCare.

David Harsanyi weighs in here:

Nor, as we learned this week, is it reassuring to find out that while the House was debating passage of Obamacare, Kagan and well-known legal scholar Laurence Tribe, then in the Justice Department, did a little dialoguing regarding the health care vote, and according to documents obtained by Media Research Center, Kagan wrote: "I hear they have the votes, Larry!! Simply amazing."

Nothing says impartiality like double exclamation points!!

Private Equity Performance Proves Public Markets Are Not Efficient

So says Brett Arends, here:

If you’d invested $100,000 in the Standard and Poor’s 500 index 25 years ago, and stuck it out through all the turmoil that followed, you would have made about $800,000 in profits in return for all your trouble.

Sound good? Try this. If you’d invested in a typical basket of private-equity funds you’d have made $2.1 million. No kidding.

As ObamaCare Goes To The Supremes, Will It Stand Or Fall On Tax Grounds?

The individual mandate which is at the heart of ObamaCare insists that everyone buy health insurance in every state.

Once the mandate was challenged by opponents after passage, however, the Obama regime quickly began defending its penalties as a tax, which it was loathe to do in selling the law to the public for political reasons. While the law contains tax provisions, the penalty associated with not securing coverage is not a tax.

The tax argument raises important constitutional questions of fairness and substance. If the penalties really are taxes, aren't also the premiums, since the penalties take their place? And will everyone in every state pay the same premium tax for coverage? If some pay only the penalty, which is low compared to the premium, doesn't the law enjoin inequity?

Another question is whether anyone can avoid the tax. This in turn touches on the distinction between direct and indirect taxation. If the tax can be avoided, it is an example of indirect taxation which is permissible, but which must still be uniform. If it cannot be avoided, then the tax must be apportioned according to population so that everyone, rich and poor alike, everywhere pays the same tax, which would be easy for the rich, but not for the poor. But presumably under ObamaCare plans will vary from state to state as they do now, with premiums which vary according to coverage, so Americans will be forced to pay, and pay unequally.

Consider the income tax. If you take no ordinary income in the form of salary and wages, you are not liable to pay it. Wealthy individuals regularly take income in the form of capital gains, which is taxed under different rules with lower rates than ordinary income. The same avoidance obtains when taking income from municipal bonds and other tax-free bond investments. In important respects the federal income tax is thus indirect, and therefore does not need to be apportioned according to population.

Similarly with excise taxes. If you choose to drink wine over spirits the tax you pay per bottle will be substantially less for wine. You pay the tax on the wine, but you have avoided the tax on the bourbon. But if you drink neither at all, you avoid the excise taxation altogether. Hence the popularity of stills.

Some of these points get an interesting airing here as they apply to Obamacare:

The legal wrangling over whether a particular tax is direct or indirect, as Willis and Chung discuss, has been complicated and persistent for more than two centuries. In 1794, for example, Congress passed a tax on carriages, which opponents considered a direct tax and thus invalid because it was not apportioned by population. The Supreme Court found it was an indirect tax on the use of carriages, valid so long as it was uniform.

Obamacare imposes an annual penalty of $95 per adult, or 1 percent of income, whichever is greater, in 2014. The annual penalties are the greater of $325 or two percent of income in 2015 and the greater of $695 or 2.5 percent of income in 2016 and subsequent years.

Willis and Chung argue these are not indirect, but instead direct taxes, unconstitutional because they are not apportioned by population. It could also be argued, though, this provision is a mixed bag. The fixed annual penalty portion, for example, could be viewed as indirect and uniform and thus constitutional, while the income percentage amounts could be deemed direct but not apportioned and thus unconstitutional.

The tax could therefore be unconstitutional for those who pay income percentages but constitutional for those who pay a fixed penalty. This may be a ridiculous and unprecedented view, but it does illustrate the complexity of this issue—leaving us with a tangled legal web indeed.

The ruling of the Supreme Court is expected next June after oral arguments in March 2012.

Fireworks are expected.

Adam Davidson of NPR Wants to Increase Taxes on It, But What Really is The Middle Class?

In The New York Times, here, where he expansively defines the middle class as everyone making between $30K and $200K:

To solve our debt problems, we have to go to where the money is -- the middle class. People who earn between $30,000 and $200,000 a year make a total of around $5 trillion and pay less than 10 percent of that in taxes . . .. [M]ost economists acknowledge, and most politicians privately concede, that the middle class will have to give up some benefits . . . or it will have to pay more in taxes. Actually, it will probably have to do both.

It's a frequently repeated myth that the middle class includes many of the people in the top income quintile, that is, those making in excess of $100,000 per year, but it just isn't true no matter how often it gets repeated.

Richer men and women don't want to be called rich, of course, so they make believe they're just like the rest of us and call themselves middle class when they're anything but.

That this myth is getting repeated so often these days, however, and not just in liberal quarters like The New York Times but also in places like The Wall Street Journal, should make your antennae stand up.

I say this is all part of a softening-up operation to get the rubes ready for a big fat tax increase.

That uncomfortable feeling you get reading the article above might as well be because the author is using one of these to blow smoke up your rear end:

In all seriousness, though, the fact of the matter is that in 2010 there were 99.5 million wage earners making less than $40,000 a year, according to the latest information from Social Security, here. That's fully two thirds of all the wage earners in the country, and a long way from the earners in the top quintile.

The next tranche up from there, namely wage earners making between $40,000 and less than $80,000 a year, is really small by comparison, just under 35 million wage earners.

And fewer than 10 million wage earners inhabited the next level up in 2010, those who made between $80,000 and $120,000.

The $120,000 to $160,000 set is hardly a crowd by comparison, just over 3 million wage earners strong.

Between $160,000 and $200,000 there were 1.25 million people.

And beyond that: 1.75 million wage earners, making to infinity and beyond.

Asserting that middle class extends all the way up to $200,000 when nearly 90 percent make less than $80,000 a year is quite simply ridiculous. It's obvious that the middle is below $40,000 when the average wage of all 150 million workers in 2010 was $39,959. Worker number 75 million from the bottom made just $26,363.

A more meaningful metric for middle class is what kind of housing income can buy at that great dividing line of $40,000.

For example, when I bought my first real traditional home way back in the nineties, the seller's attorney congratulated us at closing by saying, "Welcome to the middle class." I might have said we'd never left it, seeing that we had been owners of other kinds of dwellings twice before, but the attitude represented the cultural consensus that single family home ownership with a lawn to cut defines the socio-economic middle. Being able to afford such a place has been synonymous with achieving the American dream since WWII, after a long period of economic upheaval which quite literally unsettled millions.

So who can afford what when it comes to housing today is an important measure for judging whether the American dream continues intact.

Consider that the median price of an existing single family home in the US stands at $165,400 in September 2011, according to the National Association of Realtors, here. The lowest median price is in the Midwest at $137,400, and the highest is in the Northeast at $229,400.

Assuming one can come up with the 20 percent down payment of $33,080, which is a tall order for someone making $40,000 a year in today's economy, $132,320 financed at 4 percent over 30 years means a principal and interest payment of $631 a month. Add $300 a month for taxes and insurance and the $931 monthly payment means, at a maximum percentage of income of 28 percent, income must be $3,325 a month, or $39,900 a year.

Another way to put this is that the maximum price of a home which can be afforded by a $40,000 income is the current median price of $165,400. Anything beyond that is out of reach.

So, for how many people is that out of reach?

Based on the numbers from Social Security above, for easily 66 percent of the workforce, or nearly 100 million workers who individually couldn't buy more home than the median priced home without more income. But of course many households have two earners who combine their incomes to do just that.

Nevertheless tax data from 2009 more than support the conclusion that a clear majority of Americans cannot afford housing at the median price level.

The latest information indicates that half of the country, nearly 69 million tax returns in 2009, had adjusted gross incomes of less than $32,396.

The next tranche up from there, consisting of 34.5 million more tax returns, takes us up to 75 percent of the whole country, and adjusted gross income of less than $66,193.

(And contrary to Mr. Davidson, the combined adjusted gross income of the first 75 percent of taxpayers is only $2.7 trillion. Of the first 50 percent, barely $1.1 trillion. The money is most definitely not in the middle. It's in the top 25 percent, with $5.2 trillion in AGI last year).

In other words, somewhere between 50 and 75 percent of the country would have to settle for housing which falls well below today's median price level if they had to buy today, despite the 16 percent decline in the median price from $198,100 reached in 2008.

Many who already own a home under these circumstances are desperately trying to keep theirs because they know their chances of being able to buy another one are not very good. Incomes are flat to declining and unemployment and underemployment are widespread. With home prices depressed, many who purchased during the bubble from 1998 to 2007 wouldn't walk away with enough from a sale for a down payment on another home. Some estimates put that number of underwater mortgage holders at 25 million, fully half of Americans with mortgages.

They dare not sell, because to do so is to leave the middle class.

Indeed, according to the Census Bureau here home ownership rates have fallen almost 4 percent from peak, back to 1998 levels.

And the liberals' solution to this middle class implosion is to raise their taxes.

It's not just crazy. It's mean, because increasing taxes on the real middle class will turn it into the working class, which, I gather, is the whole point of socialism.

Sharon Bialek Lived In Same Building As David Axelrod And Knew Him

An important article connects all the dots showing that the Herman Cain smear campaign bears all the marks characteristic of Obama's favorite m/o against political opponents and just happens to be centered in Chicago:

Within 24 hours of Bialek's press conference, friends and acquaintances of hers stepped forward to say that she's a "gold-digger," that she was constantly in financial trouble -- having filed for personal bankruptcy twice -- and, of course, that she had lived in [David] Axelrod's apartment building at 505 North Lake Shore Drive, where, she admits, she knew the man The New York Times calls Obama's "hired muscle."

Don't miss one word of it here.